A Tumultuous Week
U.S. stocks were under pressure all week due to recession concerns and unsettled trading in the bond and currency markets. This stress followed economic steps out of the U.K. During the previous week, the Bank of England (BOE) raised interest rates, and its prime minister announced unfunded tax cuts that the markets interpreted as inflationary. U.S. bond yields rose early last week, sending stocks lower until Wednesday’s rally following news that the BOE would buy U.K. government bonds. U.S. stocks resumed their descent the following two days to close out a disappointing week, month, and third quarter.
U.S. equities declined across the board. The tech-heavy NASDAQ suffered the most sizeable decline -10.44%.
Domestically, smaller-sized companies underperformed their larger counterparts as the Russell 2000 index declined -9.58% on the week.
Developed international markets were no different than domestic, the MSCI EAFE index fall -9.35%.
Emerging markets were also negative, down -11.75%, the worst performing equity market of the group.
U.S. bonds were quite negative across credit qualities for the week with Bloomberg Barclays U.S. Aggregate Bond index down –4.32%, and -3.97% for High Yield Corporates.
Continuing the trend of international markets underperforming domestic, the Global Agg declined -5.14%.
Fordless Ford – Is a car still a car if the name isn’t printed on the front? Ford is about to find out. “Ford Motor Co. has delayed deliveries of certain vehicles because it didn’t have the blue oval badges that go on them, in another example of how supply-chain challenges have hit automakers. Ford on Monday said it expects to have about 40,000 to 45,000 vehicles in inventory at the end of the third quarter that couldn’t be shipped to dealers because they were awaiting needed parts. Many of these vehicles are high-margin trucks and SUVs, and the shortages primarily involved parts other than semiconductors, the company said.”2
Historic Home Run – “Aaron Judge created history in Toronto when he earned his 61st home run of the season, tying the all-time record held by Roger Maris in 1961. Sports memorabilia collection companies have estimated the value of the historic ball at $2 million. However, the Yankees have a few more games in the regular season which poses the question - what will the 62nd homer be valued at? According to a few sources, the price of the ball could go as high as $2.5 million.”3
Demand for $10M+ Homes – “Homes priced at $10 million and up sold briskly in New York City, the Hamptons, and South Florida during the first half of 2022, according to a new report from the brokerage Serhant. It wasn’t fast enough, however, to outrun the market decline that’s gripped the entire US. In a potential indication of a market slowdown, the number of signed contracts declined in comparison to the first half of 2021. This year’s first half brought 127 contracts for homes priced above $10 million in New York; last year, 161 contracts were signed in the same period.” 4
Reprinted with permission from BTN. Copyright © 2022 Michael A. Higley.
Data Obtained from Bloomberg as 09/30/2022
Producer Prices - PPI (headline and core): Producer prices (output) are a measure of the change in the price of goods as they leave their place of production (i.e. prices received by domestic producers for their outputs either on the domestic or foreign market).
CPI(headline and core): Consumer prices (CPI) are a measure of prices paid by consumers for a market basket of consumer goods and services. The yearly (or monthly) growth rates represent the inflation rate.
GDP Gross domestic product (GDP) measures the final market value of all goods and services produced within a country. It is the most frequently used indicator of economic activity. The GDP by expenditure approach measures total final expenditures (at purchasers' prices), including exports less imports. This concept is adjusted for inflation.
ISM Manufacturing Index - PMI Surveys track sentiment among purchasing managers at manufacturing, construction and/or services firms. An overall sentiment index is generally calculated from the results of queries on production, orders, inventories, employment, prices, etc.
ISM Services Index - PMI Surveys track sentiment among purchasing managers at manufacturing, construction and/or services firms. An overall sentiment index is generally calculated from the results of queries on production, orders, inventories, employment, prices, etc.
PCE(headline and core) - PCE deflators (or personal consumption expenditure deflators) track overall price changes for goods and services purchased by consumers. Deflators are calculated by dividing the appropriate nominal series by the corresponding real series and multiplying by 100.
Personal Income - Consumer or Household Income (often referred to as personal income) tracks all income received by households including such things as wages and salaries, investment income, rental income, transfer payments, etc. This concept is not adjusted for inflation.
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